Checkers Drive-In Restaurants, Inc. (Nasdaq: CHKR) announced November 30 that it sold 36 Rally’s Restaurants in the Detroit, Michigan market area and 6 Checkers Restaurants in the Kansas City market area to the Great Lakes Restaurant Company, LLC of Independence, Ohio for $15.6 million. Great Lakes Restaurant Company, LLC, an affiliate of Midland Foods Services Group that currently operates 119 Pizza Hut Restaurants in seven midwestern states, will operate the Checkers and Rally’s restaurants as a franchisee and pay ongoing royalties based on sales at the restaurants. As previously announced, the company intends to use the net proceeds from the sale to reduce existing debt.

In related news, Checkers announced that it has executed letters of intent to sell and franchise 80 other Checkers and 35 Rally’s restaurants in various markets with four separate prospective franchisees. The company is currently negotiating definitive agreements with each of these parties.

“We are clearly on track with our plan to raise cash through the sale of markets,” stated William P. Foley, II, chairman of the board. “These transactions are just the first step in bringing in the funds we need to reduce our debt. We are actively marketing additional restaurants as part of our strategy and expect to announce other sales soon. Our goal is to pay off a significant portion of our debt on or before it becomes due next year and refinance the balance on favorable terms. I believe these transactions will ultimately strengthen our brand as our new franchisees focus their efforts on improving sales at their restaurants.”

In other related news, Checkers indicated it was terminating its previously announced rights offering. “Given the recent trading levels of our stock, the rights offering no longer makes sense,” stated Mr. Foley.

Checkers Drive-In Restaurants, Inc. and its franchisees own approximately 469 Checkers operating primarily in the southeastern United States and approximately 465 Rally’s operating primarily in the Midwestern United States.

News, Checkers